Unemployment Is Worse Than We Know, The Recovery Challenge Harder Than We Think

As we move into the dog days of summer, and a coming Congressional recess, the Obama Administration has shifted its focus back on to the economy and wants to convince one and all that an economic recovery is just around the corner.

In recent speeches, the President warns that the Republicans, if they take over, will support policies that will usher in a new recession, as if the current recession is over. “They are the same policies, “ he said, ”that led us into this recession. They will take us backward at a time when we need to keep America moving forward.”

He wants to push “distractions” like the Shirley Sherrod affair and the BP spill out of media view so we can all get back to the economy.

Wake me up when reality intrudes into a “debate” that is flawed on all sides.

The “signs” of recovery, so breathlessly trumpeted by the politicians who want it to be true, is not generating the new jobs we need. The resumption of unemployment benefits will help those who were cut off but not all who need them. Foreclosures are rising, and government programs to stop them are not working.

It is unlikely that the current policies can remedy any of this and it is certain that extending tax cuts for the rich will not create jobs. There is no jobs bill about to be enacted. Many of the industries blue-collar workers toiled in are going or gone. Bailed out General Motors just spent $3.5 Billion dollars to buy a new lending company to get those subprime loans restarted to move cars off the lot. Is this moving “backwards” or not?

Unemployment is worse than we know. The Daily Finance site reports that the firm TechnoMetrica that monitors the stats is finding the real figures shocking:

“The June poll turned up 27.8% of households with at least one member who’s unemployed and looking for a job, while the latest poll conducted in the second week of July showed 28.6% in that situation. That translates to an unemployment rate of over 22%, says Mayur, who has started questioning the accuracy of the Labor Department’s jobless numbers.”

In fact, Austan Goolsbee, who is now part of the White House Council of Economic Advisers, wrote in a 2003 New York Timespiece titled “The Unemployment Myth,” that the government had “cooked the books” by not correctly counting all the people it should, thereby keeping the unemployment rate artificially low.”

Those books are apparently still being cooked. The Administration now admits there will no movement in the rate until 2012.

What may be more serious is the erosion of the middle class that well underway, Business insider cites these statistics:

• 83 percent of all U.S. stocks are in the hands of 1 percent of the people. • 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.

• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

• 24 percent of American workers say that they have postponed their planned retirement age in the past year.

• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975

While the middle class is shrinking, their wealth is being transferred to the rich. Senator Bernie Sanders has been livid in denouncing this:

“The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. Four hundred families! During the last 15 years, while these enormously rich people became much richer their effective tax rates were slashed almost in half. While the highest paid 400 Americans had an average income of $345 million in 2007, as a result of Bush tax policy they now pay an effective tax rate of 16.6 percent, the lowest on record.

Last year, the top 25 hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses, and police officers.”

The words of Shirley Sherrod on our growing economic inequality are worth repeating in this context:

“Y’all, it’s about poor versus those who have, and they could be black; and they could be white; they could be Hispanic. And that made me realize I needed to work to help poor people—those who don’t have access the way others have.”

Speaking of “access,” last week we learned that the bankers siphoned off $1.2 billion for their own bonuses from bailout funds. They were scolded but no one is demanding the money be paid back. We also learned that the total bailout for the banksters was not just $700 billion but a whopping $3.7 TRILLION once you factor in the Fed, et. al.

And on top of that, companies are making money, hoarding cash, but not creating jobs. The Times reports:

“Among the S&P 500 companies that have reported second-quarter results, more than one in 10 had higher profits on lower sales, nearly twice the number in a typical quarter … while wages and salaries have barely budged from recession lows, profits have staged a vigorous recovery…”

If new jobs are to be created, it looks like small businesses will have to do it.

In light of all this, with jobs known as a “lagging indicator” of economic recovery, how can we expect the Obama Administration to effectively mobilize political support from the millions of Americans who are struggling harder than ever to survive?

The President is right about the Republicans threatening to make things worse, but is he really making them any better? He seems to prefer shadow boxing than ripping into his opponents, being a mediator rather than a fighter. Already, he’s getting a lot of flack for being “anti-business.” Bizarro!

Truth to tell, can he do what needs doing at all, given the conservative orientation of our politricks, and the reality that what we are dealing with are structural and systemic problems that political rhetoric of any stripe cannot overcome? As The Economist assessed the “unprecedented rise in the rate of long term-unemployment,” it noted bluntly, “sadly, no quick fix is available.”

More fundamental changes are needed than those that currently top the Obama agenda.

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“Many of the industries blue-collar workers toiled in are going or gone.”

And? Also gone are once-important jobs like whaling and horse-whip manufacturing. The world changes. 100 years ago, who could've predicted IT professionals?

“While the middle class is shrinking, their wealth is being transferred to the rich.”

Debatable. Economist Thomas Sowell's book “Economic Facts and Fallacies” explains this idea in greater detail: 'this widely-accepted assertion [about the middle class disappearing], he writes, is simply a function of statistical voodoo: defining a “middle class” income bracket (say, $35,000 to $50,000), claiming it is shrinking, and then ignoring the fact that the bracket is shrinking because average incomes are moving up, not down, the curve.' > http://www.realclearpolitics.com/articles/2008/… < In America, the rich get richer … and the middle-class gets richer, too.

“61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.” Lots of people CHOOSE to live beyond their means.

“66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.” More statistical voodoo.

“36 percent of Americans say that they don’t contribute anything to retirement savings.” If so, 36% of Americans are stupid. Only $100 per month, invested at an average annual rate of return of 10%, will increase to over $1 million in 40 years.

“A staggering 43 percent of Americans have less than $10,000 saved up for retirement.” As mentioned above: lots of Americans are stupid for living beyond their means and not planning for the future. No one is to blame but the stupid, lazy people (see Aesop's fable about the Ant and the Grasshopper)

In short, this article strikes me as yet another example of pervasive cultural pessimism. Everything's bad, everything's going to hell in a handbasket. It's postmodernism via Hegelian deification of the state. It's easier to look to Messiah Obama to fix your problems than to take a hard look in the mirror, admit your failings and change.

Andrew

Quoting Uncle Thomas? I bet I know who you are.

Your last paragraph's diagnosis is self-contradictory. One can't deify the state and believe Obama will fix everything and be a pessimist. Just the opposite; one has to be naive. It's the fools on the Tea Bag right who believe Obama is a Stalinist destroying our freedoms by not letting the poor and sick die in the gutters like they deserve who are delusional apocalyptic dystopians.

By the way, when was the last time you looked in the mirror and spotted a failing?

http://voxmagi-necessarywords.blogspot.com/ VoxMagi

Seriously…you quoted Thomas Sowell here? As if that lends you credence instead of detracting from it? At least you can reference Hegel properly…so you have no excuse for having essentially farted in the elevator of public discourse by dragging in Sowell. It's like you came for a marathon and opened by slashing your hamstrings.

No one needs “Messiah Obama” to do anything except show even the faintest signs of seriousness about changing the way America does business…because we've been slashing our own wrists for 30 years. A few hundred ultra wealthy people does not generate an economy…except in yacht and gold plated toilet fixture sales. Wages drive an economy. The power to purchase drives an economy. Building a larger investment class drives the economy…if you're a capitalist you know these things to be true and unassailable…

The neo con argues “The car would only cost 10,000 instead of 30,000 if we brought these out of control production costs, wages and benefits under control.”

The person who retains a shred of sanity answers..”Sure…but the thousands of people who used to build them at a decent wage with benefits no longer have jobs in manufacturing, live on a fraction of their parents wages mostly eaten by housing costs, and wouldn't qualify for a loan for even a few thousand dollars. Congratulations, thanks for playing. Welcome to the third world.”

Speaking for Michigan, where we watched this scenario play out…I'm perfectly willing to state that the 70's saw union excesses that hurt productivity and profitability…it really goes without saying. But you seem to believe the swill and hype generated by people who have a vested interest in preventing any changes to the field of play…Chicago-school neo liberalism is working fine for them…why should it change? Unfortunately, if you aren't living in a lovely gated community and commuting to the office downtown in your suit, the world is very different from their rosy perspective.

I sicken when I hear bloated hags and frauds carp about the lazy and unemployed failing to manage themselves…when I look out every day at people who worked a lifetime…now down to part time jobs at 7.50 and hour after watching wages dwindle for even white collar positions. The 25K a year that might have been a luxurious living in 1975 is subsistence level for a family of four today…and all Thomas Sowell's numerical fudging cannot change that.

It isn't pessimism…its life. It just sounds pessimistic because its actually that bad. I've got friends with Masters degrees that should be paying off college loans with a nice 60-80K position…working for minimum wage because they can't depend on unemployment to bail them out. I watch factory workers who once made 30K a year scratch out a living on a part time job for 6-8K a year…or work two jobs to bring the take up to 14K.

Everywhere I see people working less, for less…but the real costs do not go down. Rent in anyplace that isn't risking condemnation is 600-700 a month. In some cases thats more than two weeks wages. They budget food carefully. Live without cable TV or air conditioning or phones. They slash away every luxury to make sure that the roof is over their head, the lights are on, the car can keep making it to work, and food is on the table.

These are the people whose character and determination you assassinate on behalf of the slime that have engineered their impoverishment. You wrong them just as swiftly as the agent provocateurs you cheerfully cite.

Fuck you. Burn in hell.

Ghost Panther

Amen VoxMagi.

Haystack

“”36 percent of Americans say that they don’t contribute anything to retirement savings.” If so, 36% of Americans are stupid. Only $100 per month, invested at an average annual rate of return of 10%, will increase to over $1 million in 40 years.

“A staggering 43 percent of Americans have less than $10,000 saved up for retirement.” As mentioned above: lots of Americans are stupid for living beyond their means and not planning for the future. No one is to blame but the stupid, lazy people (see Aesop's fable about the Ant and the Grasshopper)”

You can work hard and be intelligent and still not find work which affords you the luxury of saving money. I worked for a bookstore back in the 90's–we had people with PhD's applying for $8.00/hr positions. The truth is, some of the people who wait your tables could probably do your job better than you, if given the opportunity.

Perhaps that's why people like you are so eager to denigrate them.

Connie Dobbs

Messiah Obama is slightly more real than Messiah Jesus.

5by5

“While the middle class is shrinking, their wealth is being transferred to the rich.”

Debatable. Economist Thomas Sowell's book “Economic Facts and Fallacies” explains this idea in greater detail: 'this widely-accepted assertion [about the middle class disappearing], he writes, is simply a function of statistical voodoo: defining a “middle class” income bracket (say, $35,000 to $50,000), claiming it is shrinking, and then ignoring the fact that the bracket is shrinking because average incomes are moving up, not down, the curve.' In America, the rich get richer … and the middle-class gets richer, too.”

Total bullshit.

REGULAR expenses (I'm not talking about luxury items – I'm talking about food, rent, education, transportation, and health care) have all FAR outpaced income gains for average Americans, who's income hasn't even kept up with inflation. Meanwhile CEO's have seen a 400% increase in their salaries — at the same time as they're laying off workers by the tens of thousands.

Just ask one of the 20 worst CEO's of the last century, Carly Fiorini, who's running for Senate in California. Because she wants to do for my state, what she did for Hewlett-Packard. Namely, make the profits plummet 90%, make the stock lose 80% of its value, while laying off thousands upon thousands of American workers and offshoring their jobs. Then she took a big golden parachute payoff, and is now using that money to run for office. Neat huh?

Seriously man, if you're going to try and pitch some bullshit like about how poor the rich are, and how lucky the ever shrinking middle class is (not to mention the vastly increasing numbers of impoverished people) then I am going to have to break my foot off in your ass.

justagirl

“Wake me up when reality intrudes into a “debate” that is flawed on all sides.”

wow. what a trooper.

Ghost Panther

Your Mom forgets to factor in the immense amount of outsourcing that corporations implement in order to maximize profit that goes–more than likely–to the executives at the top. Although I agree the current economic state is the result of both a corrupted government and general populace living way beyond their means, I do believe that the general public is not the significant component itself. There are so many mediums today where companies can channel out their latest product or service to entice an already overworked common worker. I mean, what are we supposed to do? All become Amish and banish contemporary culture? Highly doubtful. This capitalization on our needs and desires not only puts us in perpetual debt, but is also reinforced in our education and society–like it always has been. Our SOCIALIZED education institution inhibits critical thinking and independent reasoning. Schools only strive for success and being number one in the state for assessments. They also eliminate any controversial lessons or subjectable material that could lead to a PC lawsuit. Nevermind teaching the importance of questioning everything and possibly changing current paradigms, you need to earn that scholarship! You see, we are already influenced during our formative years that success and performance outweighs true knowledgable fullfilment. THE ELITE CONTROLS IT.

Haystack

Do you imagine that private education would automatically do a better job of encouraging critical thinking and independent reasoning? The first they did in the morning at my private school was to sit us in front of “Channel One” TV. The school got free TVs in every classroom in exchange for providing Channel One with a captive audience towards when they could market clearasil and sports drinks.

The problem socialism, it's rationalism.

A Bad Joke

The problem is, not enough people are employed. Spend money to make money.

So many small business owners are defensive. You have to Spend Money to Make Money. So there we have a problem. Hire. Pay them. The Capitalist economy is based on trade.

ENZO2012

Had our corrupt government allowed the banks to fail, we wouldn't be having this conversation right now. The next step….GET RID OF THE ILLEGALS and let's see how many job opportunities all of a sudden become available!

Had they allowed the banks to fail, we'd be in an alley arguing over a can of baked beans.

5by5

Start jailing the CEO's who EMPLOY illegal aliens, and much of that problem will solve itself. But you're right about the bank thing. That was Bush's final “steal big” moment on behalf of his REAL constituency — the “have-more's” — before his retirement to “the ranch” where the little Connecticut Yankee Dipshit could go play cowboy again.

5by5

Putting aside the people who don't get counter (and we're very good at putting them aside and not thinking about them), for even the people who DO receive unemployment, it's a total joke. And California is particular under-resourced in this area.

Even if you make the highest allowable income (which is roughly the $70k range – the national average is $40k) that means that if you have to go on unemployment, first you will have to wait two weeks before being able to even APPLY for help. Next it will take another two weeks for them to process your ONLINE application. Then the U.S. mail will take an average of 7-10 days in mailing you your check. That means it can nearly be a month and a half before you see any money AT ALL, and most Americans live paycheck to paycheck, which means they have no savings to fall back on during that time.

Then when you DO get your check, even at the highest level, it will be only about $400. And each week, you must fill out paperwork and mail it back in demonstrating that you've applied for at least 5 jobs every week. There is no online way of doing this. Therefore it takes your next request ANOTHER 7-10 days to get into their offices, and ANOTHER 7-10 days to get your next check.

That means you're getting less than $400 every two weeks.

Average rent in Los Angeles is $1400.

In San Francisco, it's even higher.

Do the math.

It's like they're actually TRYING to create homeless people.

5by5

“While the middle class is shrinking, their wealth is being transferred to the rich.”

Debatable. Economist Thomas Sowell’s book “Economic Facts and Fallacies” explains this idea in greater detail: ‘this widely-accepted assertion [about the middle class disappearing], he writes, is simply a function of statistical voodoo: defining a “middle class” income bracket (say, $35,000 to $50,000), claiming it is shrinking, and then ignoring the fact that the bracket is shrinking because average incomes are moving up, not down, the curve.’ In America, the rich get richer … and the middle-class gets richer, too.”

Total bullshit.

REGULAR expenses (I’m not talking about luxury items – I’m talking about food, rent, education, transportation, and health care) have all FAR outpaced income gains for average Americans, who’s income hasn’t even kept up with inflation. Meanwhile CEO’s have seen a 400% increase in their salaries — at the same time as they’re laying off workers by the tens of thousands.

Just ask one of the 20 worst CEO’s of the last century, Carly Fiorini, who’s running for Senate in California. Because she wants to do for my state, what she did for Hewlett-Packard. Namely, make the profits plummet 90%, make the stock lose 80% of its value, while laying off thousands upon thousands of American workers and offshoring their jobs. Then she took a big golden parachute payoff, and is now using that money to run for office. Neat huh?

Seriously man, if you’re going to try and pitch some bullshit like about how poor the rich are, and how lucky the ever shrinking middle class is (not to mention the vastly increasing numbers of impoverished people) then I am going to have to break my foot off in your ass.